Business entities in Oman
Healy Consultants advises our Clients on the optimum corporate structure for doing business in Oman, and completes the setup procedures on our Client’s behalf. Due to the imposed restrictions on foreign investment, the most common solution is setting up a limited liability company with an Omani, an American or GCC State national as a passive nominee shareholder. However, it is also possible for our Clients to set up a 100% foreign owned company if they meet certain government requirements, or if they incorporate a company in one of the Omani free zones.
Doing business in Oman with a local entity
The Omani limited liability company (LLC)
- All local companies are required to have i) two shareholders and one director (who can be the same persons) ii) a minimum paid up capital of OR150,000 (Approx.US$390,000) and iii) a local address. Of the two required shareholders, one must be a national of Oman, of a GCC State or of the USA and must own 30% of the company’s shares;
- Since the signature of the 2009 Free Trade Agreement with the USA, American citizens are treated as local citizens and are therefore allowed to form local companies without a local partner, provided that all of the shareholders are American. For such cases, the minimum share capital is set at only OMR20,000 (Approx. US$52,000) and is not required to be paid up;
- Best uses: An Omani LLC is the most commonly used entity for foreigners that wish to do business in Oman for various trading and manufacturing business activities.
The wholly foreign-owned limited liability company (LLC)
- According to Omani laws, foreign nationals looking to own 100% shares in local companies must seek approval of the Ministry of Commerce and Industry (MOCI).To obtain such approval, a company must submit a detailed business plan highlighting the capital investment and the projected benefits to the Omani economy, including the number of local jobs to be created;
- Furthermore, the company is also required to have i) minimum of two shareholders and two directors and ii) minimum capital of OR1million (Approx. US$2.6 million);
- Best uses: securing approval by the Omani government is very challenging and will require a higher paid-up capital. We recommend only this type of business entity to Clients that are willing to do such investment and to hire a significant number of local employees.
The Oman free zone company
- Companies incorporated in the Omani Free Zones are permitted to i) be 100% foreign owned ii) conduct business with local customers and iii) do not require a minimum investment. This is a suitable alternative to the strict restrictions of establishing a wholly foreign owned LLC;
- Free zone companies are also exempt from i) corporate income tax ii) custom duties and iii) have lower requirement for employment of Omani workers (only 10%);
- Best uses: Free zones are recommended for manufacturing companies that wish to use Oman as a base to expand operations in the middle eastern region.
The joint stock company (SAO)
- Joint stock companies that trade their shares publicly are referred to as public joint stock companies (SAOG), and require i) a minimum share capital of OR150,000 (Approx.US$390,000) and ii) an Omani shareholder with 30% of the shares;
- Joint stock companies that do not offer shares to the public are known as private joint stock companies (SAOC), and require i) a minimum share capital of OR50,000 (Approx. US$130,000) and ii) minimum of three shareholders, one of which must be an Omani national holding 30% of the total shares;
- Any type of joint stock company that involves foreign national participation must have i) a minimum capital of OR150,000 (Approx. 390,000) and ii) seek approval from the Ministry of Commerce and Industry;
- Best uses: We recommend joint stock companies for larger projects, involving large investments of funds or raising private or public capital.
The limited partnership (LP)
- A limited partnership is a commercial company that requires at least 1 general partner and 1 limited partner to be registered;
- The general partner is liable for the partnership’s debts to the full extent of the partnership’s investment whereas the limited partner is only liable for the partnership’s debt based on their capital contribution;
- The general partner must be an Omani national and is obliged to register the limited partnership entity with the Oman Commercial Register.
- Best uses: We recommend limited partnerships for those Clients looking to establish their business in Oman to provide professional services such as accounting, auditing or fiduciary services.
Doing business in Oman with a foreign entity
The Omani branch office
- Oman’s Commercial Companies Law limits the activities of branches not owned by GCC or US shareholders to government contracts or to areas economically necessary for Omani development. In both cases, branches are required to have a local agent to sponsor Oman visas and licenses;
- The branches are also required to obtain approval from the Ministry of Commerce and Industry (MOCI) and the license is only valid for the duration of the project. To issue an operations license, the ministry will require a bank guarantee of US$390,000;
- Best uses: This type of business entity is only recommended for Clients that have already secured a project contract with the Omani government.
- While the Omani representative office is 100% foreign-owned and controlled, it is not permitted to make direct sales within Oman. Its scope of activities is limited to i) promotion of the parent company’s business and ii) market research;
- Representative offices must have i) at least one appointed individual representative ordinarily resident in Oman and ii) are also permitted to sponsor and hire local or foreign employees;
- Best uses: Representative office are recommended for Clients that wish to promote and explore the Omani market, without carrying any commercial activity in the country.
- Foreign companies looking to do business in Oman and are not keen to register a local company or branch in Oman are permitted to conduct business through local commercial agents;
- The agreement with the local agency must be registered with the Ministry of Commerce and Industry (MOCI);
- Clients working through a commercial agent are still required to file annual tax returns and pay corporate income tax on their Omani income;
- Only Omani nationals registered with the Oman Chamber of Commerce or local entities with 51% local shareholding can be appointed as commercial agents;
- For the duration of the agreement, only the commercial agent is permitted to engaged directly in the sale of products and services in the country.
Table of comparison between Oman entities
|70% LLC||100% LLC||Free zone (FZ)||JSC||LP||Branch office||Representative office|
|Type of business permitted?||All||Government contracts and MOCI approval||All||All||Professional services||Government contracts and MOCI approval||Research and marketing|
|Allowed to issue sales invoices?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Allowed to sign contracts?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Corporate tax payable?||15%||15%||0%||15%||15%||15%||0%|
|Allowed to import goods?||Yes||Yes||Yes||Yes||No||Yes||No|
|Allowed to export goods?||Yes||Yes||Yes||Yes||No||Yes||No|
|Wholly foreign owned?||No||Yes||Yes||No||No||Yes||Yes|
|Oman bank account allowed?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|How long to open company bank account?||3 weeks||3 weeks||4 weeks||4 weeks||4 weeks||4 weeks||4 weeks|
|Can rent an office in Oman?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Tenancy agreement required?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Can conduct business within Oman?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Can apply for immigration visas?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Can hire staff in Oman?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Incorporation period?||6 weeks||6 weeks||2 weeks||7 weeks||6 weeks||6 weeks||5 weeks|
|Shelf companies allowed?||Yes||Yes||Yes||Yes||No||No||No|
|Minimum shareholders?||2||2||1||3||2||Parent company||Parent company|
|Minimum directors or representatives allowed?||1||1||1||2||2||1||1|
|Min capital?||US$390,000||US$52,000||US$1||US$1.3 mil||None||None||None|
|Public Relations Officer (PRO)?||Yes||Yes||Yes||Yes||Yes||Yes||No|
|Public registrar of companies?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Corporate directors allowed?||Yes||Yes||Yes||Yes||No||Yes||Yes|
|Oman resident company secretary required?||Yes||Yes||Yes||Yes||No||Yes||Yes|
|Can buy Oman property?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Need to travel?||No||No||No||No||No||No||No|
|Annual Oman tax return?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Annual audited financial statements?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Access to Oman double tax treaties?||Yes||Yes||No||Yes||No||No||No|
|Annual license renewal?||Yes||Yes||Yes||Yes||Yes||Yes||Yes|
|Oman national director or shareholder required?||Yes||No||No||Yes||Yes||No||No|
|Allowed own shares in other Oman companies?||Yes||Yes||Yes||Yes||Yes||No||No|
|Draft invoice||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF|